Investing in international stocks gives Indian investors an opportunity to participate in the growth of major global companies, including Apple, Meta and Amazon. It also offers exposure to sectors such as artificial intelligence (AI), where investment choices in the Indian market may be more limited.
Indian residents can access overseas investments through permitted regulatory routes, including the Reserve Bank of India’s Liberalised Remittance Scheme (LRS). Platforms offering international investment services, including those operating through GIFT City, have also expanded the available options for investors seeking exposure to foreign markets.
How Much Can Indians Invest in Foreign Stocks?
Under the RBI’s LRS framework, eligible Indian residents can remit up to $250,000 per financial year for permitted purposes. These include investing in foreign stocks and overseas-listed exchange-traded funds (ETFs), as well as covering expenses such as education and travel.
The full annual limit can be used for investments in US stocks if the investor does not use any portion of it for other permitted overseas expenses during that financial year. Investors must still comply with applicable regulations and the requirements of their chosen investment platform.
Can Indian Investors Apply for US IPOs?
Interest in overseas investments has also raised questions about whether Indian investors can buy shares in US initial public offerings (IPOs) at the offer price.
For example, Anthropic, the artificial intelligence company led by Dario Amodei and known for developing Claude, has been the subject of reports about a potential stock market debut, with a Nasdaq listing reportedly targeted for the end of November. Such reports may prompt investors to explore whether they can participate in the offering before the shares begin public trading.
Indian residents are permitted to invest in overseas securities, subject to applicable rules. However, getting shares at the IPO price can be difficult because the US allocation system differs from India’s.
According to an INDmoney blog post, around 90% of shares in many US IPOs are allocated to institutional investors, including pension funds, hedge funds and large asset managers. The remaining 10% may be allocated to US retail investors. Indian retail investors generally do not participate in this US retail allocation.
Even US retail applicants may receive only a small portion of the shares they request, or none at all, when an IPO attracts heavy demand.
How US IPO Allocations Differ From India
In India, the Securities and Exchange Board of India (SEBI) requires at least 35% of an issue to be reserved for retail investors in applicable IPOs. The US does not have an equivalent mandatory retail allocation requirement.
Instead, investment banks acting as IPO underwriters manage the offering process, including pricing and share distribution. Institutional investors often receive a substantial portion of the available shares, which can make it difficult for individual investors to secure an allocation.
As a result, Indian investors interested in a US-listed company may find it more practical to consider buying shares after the IPO, once trading begins on a public exchange.
When Can Indians Buy Newly Listed US Stocks?
After a US company completes its IPO, its shares begin trading on a public exchange such as the New York Stock Exchange (NYSE) or Nasdaq.
The timing of the US market opening in Indian Standard Time (IST) changes during the year because of daylight saving time in the United States. Under the timings provided in the source material, trading begins at 7:00 PM IST during the period from April to October and at 8:00 PM IST from November to March.
Indian investors can purchase eligible US-listed shares through brokerage platforms that provide access to international markets. Before investing, they should review the platform’s fees, applicable regulations and the risks associated with foreign investments.
Disclaimer: This article is intended for general informational purposes only and should not be considered investment, legal or tax advice. Overseas investment rules, IPO allocation practices and market timings may change. Investors should verify the latest RBI and other relevant regulatory requirements, check their brokerage platform’s terms, and consult a qualified professional before making investment decisions.